As the U.S.-Iran war nears one month, the Strait of Hormuz — a narrow chokepoint that normally carries about one-fifth of the world’s oil — has become a major pressure point. Iran has threatened to strike ships transiting without its permission, and more than a dozen Iranian drone and missile strikes on ships have been reported. Daily transits through the strait have fallen roughly 90%–95%, leaving hundreds of tankers effectively trapped in the Persian Gulf. Marine insurance costs have surged, and some U.S. officials have discussed offering military escorts, but experts say normal traffic is unlikely to resume until the fighting eases substantially.
Insurance costs and availability
Specialized war-risk insurance for vessels transiting the strait has jumped to roughly 3.5%–10% of a ship’s value, compared with 1%–2% in the first week of the conflict and a fraction of a percent before the war. This coverage protects against damage to tankers and oil-spill costs, and rates vary by owner, vessel speed and whether a tanker is laden. Insurers have continued to underwrite this business, but premiums reflect elevated risk.
Despite the spike, many shipping experts say insurance is not the main barrier. The larger constraint is safety and the desire to protect crews from being placed in harm’s way. “You can be insured, but it doesn’t mean you’re not still massively concerned about losing your ship, losing your crew or causing an oil spill,” one analyst said. In short, insurers can cover losses, but they can’t remove the immediate physical danger to people and assets.
The U.S. International Development Finance Corporation has proposed a DFC-backed maritime reinsurance program, partnered with Chubb, that could cover as much as $20 billion in losses. That sort of support would be a “massively positive” boost but wouldn’t be ready overnight; brokers caution shippers not to count on a new program in the next few days or weeks.
What would make insurers lower premiums?
Many insurers say premiums will remain elevated until active hostilities stop. If there is a ceasefire or Iran’s ability to strike ships is clearly degraded, premiums could fall significantly — perhaps back toward about 1% of vessel value, though likely still above prewar levels because the threat could recur. Insurers are also unlikely to adjust rates immediately after one successful transit; they would want to see numerous safe, repeated transits over time before changing their pricing.
Military escorts: helpful or impractical?
The idea of military convoys has been floated as a way to reassure shippers, but escorts face limits while the conflict continues. Analysts note the current threats are drones and ballistic missiles rather than the naval threats of past decades, and that modern surveillance makes it harder to hide ship identities. Many shipowners and insurers would remain reluctant to run the gauntlet even with escorts unless there is a clear and lasting reduction in the threat.
History shows navies have escorted tankers before — at the end of the Iran-Iraq War the U.S. Navy escorted Kuwaiti tankers — but today the risks and technology are different. Experts say escorts are more credible and useful after a ceasefire or as part of a broader, enforceable peace arrangement; even then, initial transits would likely be limited to a few willing vessels as a test.
How a ceasefire would play out
If hostilities paused in April or May, some analysts believe oil exports could return to prewar levels roughly by July, but the restart would be gradual. About 130 crude and fuel oil tankers and around 210 refined-product tankers are currently in the Persian Gulf. Companies would likely send a small number of vessels first to test the truce; if those transits succeed, more cautious shippers would follow. That “slow trickle” would then build as confidence grows.
Production itself presents another bottleneck. Several Gulf producers curtailed output during the crisis, and oil wells and infrastructure can take weeks to months to restart fully. Producers will want confidence that a ceasefire is durable before resuming suspended output; otherwise they risk restarting only to shut down again if fighting resumes. Decision-making within Iran’s military and political structures appears fragmented, adding uncertainty about whether all factions would adhere to a ceasefire — a key concern for shippers and insurers.
Liquefied natural gas (LNG) could take far longer to recover. Iranian strikes have damaged facilities in Qatar, the region’s largest LNG exporter; QatarEnergy has said a portion of export capacity is offline and repairs could take three to five years for some damage.
Why some ships are still transiting
Even amid the conflict, a handful of vessels continue to transit the strait — on average only a few per day. Some are linked to Iran, enabling Tehran to keep selling oil, while others appear to have Iran’s permission. Tehran has announced it will allow safe passage for vessels from selected “friendly” countries, including China, India and Pakistan, and there are reports Iran may be charging fees for approved transits. Analysts caution that Iran is unlikely to widely reopen the strait while hostilities continue, since the chokepoint is a key source of leverage.
Price implications
Oil prices jumped significantly after the conflict began; Brent traded well above prewar levels. Even after a ceasefire, markets would likely remain tight for months because restarting flows and production takes time. A rapid market sell-off in futures is possible when a ceasefire is announced, but physical volumes would still need weeks to months to normalize. Experts also warn of a disconnect between physical supply conditions and financial-market price moves, with prices reacting sharply to statements from political leaders and thereby amplifying volatility.
Bottom line: What needs to happen
– Active hostilities must stop or Iran’s strike capability against ships must be clearly degraded. Iran effectively controls whether many vessels feel safe transiting the strait.
– Insurers need to see repeated, successful transits and credible security guarantees before premiums fall to near-normal levels.
– Producers must be willing to restart curtailed output, and damaged infrastructure — especially in the LNG sector — may require much longer to repair.
– Military escorts could help restore confidence but are most credible as part of a broader, enforceable peace arrangement; while fighting continues, escorts alone are unlikely to reopen the strait at scale.
Even with a ceasefire, recovery will be phased: initial test transits, a gradual return of risk-averse shippers, and then a ramp-up of production and exports over weeks to months. Oil markets and prices will likely feel the effects well beyond a single announcement, meaning a full return to preconflict normality will not be immediate.